Australia is a Banana Republic

It’s official, Australia is a banana republic (Banana republic is a political science term for a politically unstable country whose economy is largely dependent on the export of a single limited-resource product, such as bananas) – Or in our case minerals.

In an incredibly ironic turn of events, Julia Gillard got axed as Prime Minister by the very man she back stabbed to gain the position in the first place only a few years ago. Why did this happen? Because the party was so terribly unpopular that they had to go back to the previous guy, who was only removed because at the time he was so terribly unpopular…

Both the major political parties in Australia are as equally incompetent as each other, with the main 3rd choice (the greens) being at best considered extremists. Then you have the other available parties, which mainly comprise of certain interest groups that lack the needed policy robustness to govern a country. There really is no good options. I mean we are really scraping the bottom of the barrel over here…

The really scary thing is that the majority of the citizens of Australia don’t even see the problem. Most are too dimwitted and narrow-minded (not to mention racist & lethargic) in their political stalwartness to even consider voting based on party policies. Instead, voting in Australia has become a battle of the leaders, where a person needs only look at the attractiveness of the various party leaders to see which way they are voting, thus making party policies irrelevant.

I feel a little sorry for whoever it is that wins the upcoming election, as they will be handed an economic poisoned chalice. You see in Australia over 50% of our exports come from Iron Ore (23% share), Coal (15% share), Gas (6% share) and Gold (7% share). Most of those resources go to China, Japan and other Asian nations, and most of them have drastically reduced in price over the last few years. Mines are shutting or reducing in size all over the country and there isn’t much in the way of industry to take its place.

New housing starts are weak, tourism isn’t even close to what it used to be (thanks to a high Aussie Dollar) and manufacturing is continually contracting. This spells terrible news for Australia over the coming years with higher unemployment being almost a certainty. The only way I can see the government continuing to be able to afford its current spending regime is to either borrow more money, or to increase taxes. Although increasing taxes is never popular amongst the voters, and with Australia having some of the highest tax rates in the western world (not even including the GST or excises on things like fuel, alcohol and cigarettes) and some of the highest costs of living in the world, I can’t see that as being a palatable option.

All of this leads me to the conclusion that Australia is very much a banana republic with limited positive future economic and political prospects.

Yikes, very depressing outlook for Australia. I don’t know much about Australia, so I appreciate you providing the background. The question is: what can be done to fix the country? Even if the citizens became less apathetic what could be done?DC @ Young Adult Money recently posted..$480 Cash Giveaway!

Oh dear. Sounds very much like America too, with so many people not having a clue about party policies and simply voting b/c they think they hate the other party. One can only wonder what the next decade holds for the world……Laurie @thefrugalfarmer recently posted..Ooh, ooh, Pick Me!

Thanks for the insight on Australia! It sounds like, sadly, your political situation is somewhat like ours in that both of the two major political parties are incompetent. They’ve been moving that way for years and are even more so today. If it wasn’t so ridiculous it’d be sad.John S @ Frugal Rules recently posted..Who Knew Buying a Mattress Could be So Much Fun?

Sounds like not paying attention to national events runs rampant all over the world. I don’t most people pay attention here either unless something is obviously taken away, like unemployment or social benefits.

Doesn’t sound like much is going right. It’s frustrating when politicians are more interested in their own personal agenda than on what is good for the country. I did not realize the cost of living was so expensive. I hope to visit Australia one day, so I’ll save a lot for the trip before I come 🙂Brian @ Luke1428 recently posted..Investing Made Easy (Part III) – Where Should I Put My Money?

These days it seems like politics is about being “right” and proving the other guy wrong and not about actually helping the people they are supposed to serve. I can’t say that I’m happy to see this is a global problem, but at least it’s not just us.Shannon @ The Heavy Purse recently posted..Enter the Summer Lovin’ Giveaway

Wow, so doom and gloom. As an Aussie, I don’t think we’re doing that bad (though I do think there’s some poor decision being made, and a lot of weight of our economy on minerals and mining). I think your SMH reference is, well, perhaps not entirely balanced :p But the wikipedia – I know that Scandinavia and other parts of Europe pay far more in taxation (and are largely ok with it, as in their ‘happiness’ is high).

I think something you international readers might not know, is that it’s compulsory for all people to vote (yes, even disengaged ones). I think the issue is that there’s no enough bi partisan agreements to critical decisions (like the environment!). That being said, in Yr 10 history I learnt the basic policy points of the two major parties, and therefore totally agree with how my parents vote, even though I regularly vote for a lesser or independent party. Yes, my one vote won’t change the world, but it’s my say and I’m not going to pick something in the duopoloy cause they are bound to win (it’s like Coles/Woolworths grocery stores, I still chose to vote against the bloc)SarahN recently posted..Food memories from boarding school (& eating out summary)

I suspect that while things seem OK now, in a few years it will be a very different story. China can’t keep building ghost cities forever, and when they stop they will have no need for our iron and less need of our coal.
Also, interest rates are currently as low as they were at the height of the GFC, that doesn’t exactly paint a rosy picture.

Agreed – China’s playing the market and we’re likely to suffer (but it’s hard to say no to a junkie that’s paying you well, right?). Interest rates are a concern – can only mean things aren’t healthy. We’ll see what happens…

Thank you for an eye opening description of Australia Glen. My friends who immigrated over there always paint it as sun, surf and great outdoors, except the fact they can’t afford to have a 2nd kid while the first is still in super expensive daycare. It can’t be easy to administrate such a huge piece of land, with a spread population to whom you still have to bring public service.Pauline recently posted..Little house in Guatemala, fiesta week (35-36).

Oh wow, I’m not an expert by any means but I think a lot of countries go through something like this. Whenever the Canadian dollar gets high, there’s a big drop in American spending up here. That tends to trickle down to create mayhem with housing prices, employment levels, and cross-border markets like tourism etc.

This also happens when oil prices bottoms out in Alberta, oil & gas companies are creatures of extremes and tend to spend big or pack up all their toys and go home. It can wreak havoc on our overly-reliant-on-oil economy. That concludes my armchair political science/economic analysis. 😉

I don’t live in Australia, but that sounds like a bad deal to me. Economies which rely on exporting raw material and importing industrial goods are often slow to grow, unless they increase their manufacturing output. I hope whoever wins the next election can begin making the necessary changes.Anton Ivanov recently posted..Manage Money Like a Pro – Summer Travel Edition

This wild spending spree by all western nation governments that has been on for decades will have to come crashing down eventually. When it happens, the responsible parties will pick up the pieces and steer their respective countries in the direction of being a bit more spend thrift. This will continue for a few years until the whole cycle starts to repeat itself. All future generations will get to live in a world of Wash! Rinse! Repeat!

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